Pensions II Flashcards
WHAT are your “Service Costs?”
THE increase in the Projected Benefit Obligation that results from services performed by the employees during the current year
i.e. THEY represent the benefits earned
WHAT happens WHEN PBO exceeds the Plan Assets?
A Liability is created
WHAT happens WHEN Plan Assets exceeds the PBO?
AN Asset is created
HOW are plan investments “reported” in the Financial Statements for employee benefit pension plans and trusts?
AT Fair Value
WHAT happens when a single-employer defined benefit postretirement plan is “Overfunded?”
A Noncurrent Asset is reported
WHAT happens when a single-employer defined benefit postretirement plan is “Underfunded?”
A Current Liability, Noncurrent Liability or both are reported
WHAT happens when a benefit pension plan is underfunded and the Fair Value of the plan assets increase?
The Liability of the entity would decrease
WHY? - WHEN a pension plan is underfunded a liability exists; if the Plan Assets increases, this would reduce the liability amount on the Balance Sheet (B/S)
HOW would you calculate your “Prepaid” pension cost if you are given the following Information?:
- Fiscal Year Service cost
- Prior service cost: Amortized
- Prior service cost: Funded
You would Add:
(1) - Your Fiscal Year Service cost to the Prior service cost: Amortized
(2) - Your Fiscal Year Service cost to the Prior service cost: Funded
THE Difference between the two would be your “Prepaid Pension Cost”
Fill in the Blank.
Unfunded accrued pension cost represents ___B____.
B. THE cumulative amount by which Pension Cost exceeds the Amounts Contributed to the Plan.
WHAT do the Interest cost(s) included in the net pension cost of a defined benefit plan represent?
THE “Increase” in the projected benefit obligation due to the passage of time
BY what date must an employer’s obligation for postretirement health benefits be fully accrued?
BY the date the employee is fully eligible for the benefits
HOW are Prior service costs first recognized?
In Other Comprehensive Income (OCI) WITH a debit to OCI and a credit to PBO
HOW are Prior service cost(s) recognized after the first period (i.e. Subsequent periods)?
IT is – amortized and recognized in periodic pension cost;
- Resulting in an (increase) in periodic Pension cost, a debit, and an (increase) in OCI, a credit,
WHERE should the funded status of a defined benefit pension plan for a company be reported?
In the Statement of Financial Position (Also Known as the “Balance Sheet” (B/S))
WHAT is the primary purpose of a quasi-reorganization?
TO give a corporation the opportunity to:
- to eliminate
(1) the overstatement of assets; and
(2) any deficit in retained earnings
i. e. this provides the entity with a “fresh start”
